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Alternative Market Briefing

Stefan Lumiere inflated independent administrator's valuation of Visium's hedge fund, lied to investors

Thursday, January 12, 2017

Komfie Manalo, Opalesque Asia:

Visium Asset Management LP portfolio manager Stefan Lumiere allegedly inflated the value of the hedge fund's distressed debt holdings to make it look that the company is doing better than it actually was, prosecutors told the jury at the start of his securities fraud trial.

A report by Bloomberg quoted Assistant U.S. Attorney Damian Williams as saying in his opening statement, "For years, Lumiere corrupted the valuation process at his hedge fund to make the results look better than they were. He added that investors "trusted Lumiere to do right by them, to play it straight. Instead of being honest, Lumiere lied."

Prosecutors accused Lumiere and his colleagues of overriding the valuation of Morgan Stanley, Visium's independent administrator, by getting brokers to submit fake quotes for the securities hundreds of times. Lumiere is charged with defrauding his investors between 2011 and 2013.

Lumiere was able to generate more than $5.9m in additional fees for the company because of the inflated valuations and he also milked the hedge fund's bonus pool for executives. At its peak, the credit hedge fund managed $470m but closed down in 2013 after a massive redemption from investors.

One particular evidence presented by Williams to the court showed Visium's position at troubled f......................

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